Is timing more important than speed for grocery delivery?
A recent university study finds that at least for the grocery space, precision (the duration of the delivery window) and flexibility (ability to pick the times of the day and days of the week for delivery) can be as or more important than speed for home delivery.
“The customer must be present to receive perishable goods from the retailer,” according to the study featured in MIT Sloan Management Review and led by researchers at The University of Porto in Portugal and of Chicago Booth School of Business. ”Attended home delivery requires the retailer and the customer to agree upon a delivery time slot that works for both parties.”
The study found online grocery shoppers:
- Willing to wait 10.8 hours longer for a delivery if the delivery window is one hour shorter.
- Willing to wait an additional 7.5 hours longer if the delivery can be received on a preferred day of the week.
The analysis also showed repeat customers are willing to pay more for the same delivery attributes compared with other shoppers. Moreover, customers with very large baskets are willing to pay double the delivery fee to improve delivery-window precision by one hour.
Recommendations from the study include investing in tools that track site navigation and online/offline purchases, analyzing customer-specific time-slot selection data to understand preferences, and utilizing predictive analytics to understand what delivery attributes drive loyalty and repeat purchases.
“Analytically minded retailers can craft delivery time slots that are unique to each customer based on revealed preferences,” says Nicole DeHoratius, adjunct professor of operations management at the University of Chicago Booth School of Business, in a press release. “I strongly encourage retailers to rethink their operations to optimize not only on speed but also the most appropriate combination of speed, precision, and flexibility.”
According to a consumer survey from Coresight Research from last fall, fast delivery was the sixth most-important factor when choosing a rapid delivery service (i.e., Gopuff, Gorillas, Getir, Jokr), cited by 40 percent. The top five were low or no delivery fee (61 percent), price of items (53 percent), in-stock availability (49 percent), product quality (45 percent) and product assortment (43 percent).
- Online Shoppers Don’t Always Care About Faster Delivery – MIT Sloan Management Review
- Online Grocery Shoppers Are Willing to Pay Double the Fee to Improve Delivery Time Precision by One Hour – MIT Sloan Management Review
- Customer Preferences for Delivery Service Attributes in Attended Home Delivery – SSRN Solutions
- From Quick Commerce to Instant Needs: Exploring Business Models in Rapid Delivery – Coresight Research
- Blue Yonder Survey Finds 86% of Consumers Willing to Delay Deliveries If It’s More Sustainable – Blue Yonder
DISCUSSION QUESTIONS: Is optimizing delivery time slots more important than speed when it comes to grocery delivery? Has the grocery channel figured how to handle delivery with perishables?